Mortgage Crisis Triggers Walk-Aways
As we discussed in class about crisis in U.S economy one of the scary and hard part of the reality we need to face is how most of the Americans got themselves in to housing bubble .The buyers believed their dream of owning a home could come true and entrepreneur got themselves in to this careers that were called mortgage broker, real states agent, real state builders and etc. Every 3-4 person was in mortgages, everyone wanted to have a piece of this quick easy money market. However bubble did explod and it is scary what is going on with the housing market in today’s U.S economy. As I read this article http://www.truthout.org/article/part-i-mortgage-crisis-triggers-walk-aways , it explains little bit about the situation in housing market, most of it talks about how people simple did think about losing their job at some point. They did not think about market collapsing and everyone depend on stability which is not always case with the economy. Economy’s circle always goes up and down, but we didn’t expect to be this bad.
“To understand why the next phase of the nation’s housing crisis might mean financially troubled owners just give up and walk away from their homes, look no further than the winding roads and carefully tended lawns of the Piedmont subdivision in the once-booming exurbs of Washington.”
People just walking away giving up their American dream. The reasons for that a lot of families miscalculated their household income. Consumer spent their 99.5% of the personal disposable income in the interest rate and daily consumption .Life was good when economy was good in the U.S, but still many consumers took for granted credit cards and very little saving , to many unnesessary purchases also created some part of the problem that cause consumer debt which links with house payment as well, however the problem is a lot bigger. Most of us forgot to ask the important questions from ourselves , before we dove in to housing bubble:
WHAT WILL HAPPEN IF I LOSE MY JOB, HOW WILL I PAY MY MORTGAGE, HOW WILL I SALE THE HOUSE I BOUGHT AS INVESTMENT IF HOUSING MARKET COLLAPSE?
These are the questions we forgot to answer before we got themselves in to this housing bubble.
“She stirs her tea while leaning on a granite countertop in the gourmet kitchen of her Piedmont home, the one she and her husband can no longer afford, the one they’ve listed for three months now as a short sale: “When we moved in we thought we’d spend the rest of our lives here,” she said, pointing to the expansive rooms with gleaming wood floors.” I used to say, ‘I love our house. It’s so wonderful. We’re going to live here forever.”’ Now I just say, ‘God, I hate this place. I just want to get out of here.’”
How sad is reading these story over and over , I can not stop thinking where this people will live ? what will happen to all this people who have no jobs, who can afford home and with their kids , where will they go ? Is it to late how can we undue situation in U.S economy ?
May 25th, 2009 at 7:02 pm
Unfortunately, many homeowners are also walking away from their mortgage not because of lost income, but because of lost home equity. If you were able to make your payments when you had equity, then you should be able to make your payments without equity.
May 28th, 2009 at 1:54 am
Suppose you had your home auctioned at a foreclosure sale and the sale amount happens to be lesser than the loan money you owe your lender, your lender can sue you for this difference or deficiency within a specified number of days after the foreclosure sale. You can also be ordered by the court to make up this difference. Of course, depending on where you live, a deficiency judgment may not be the automatic next step following a mortgage foreclosure. After the foreclosure sale, your lender will have to file for a deficiency judgment. You can avoid this if you are able to provide proof that the sale price was equal to the market value of the property as on the sale date. This can be done via an appraisal of your home or other legitimate endorsements of its value.
If you are worried about your lender getting a deficiency judgment, then the best thing to do is contact an attorney to discuss asset protection strategy with the help of Land Trusts, Personal Property Trusts, etc. This will at least help you make it tough for your creditor to relieve you of your property, making them think twice about filing for a deficiency judgment.
June 4th, 2009 at 10:38 am
A very well written article. Thanks for the good tips!